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Meal kit market in Canada may have peaked

Meal-kit

Photo by Cristiano Pinto

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Meal kits are to food what IKEA is to furniture: all you need to do is put things together. Meal kits empower consumers to feel like chefs, if only for a while. They have been popular, especially throughout the pandemic.

Meal kits provide ideas, ways to manage your meals and some greatly needed inspiration for households running out of options for lunches and dinners. But over the last few weeks, we’ve been seeing signs that perhaps meal kit use has peaked in Canada.

For the most part, Canadians have got their normal lives back and have become nomads again, which means spending less time in the kitchen. According to a recent survey conducted by Dalhousie University in partnership with Caddle, 8.4 per cent of Canadians today subscribe to a meal kit service provider. That is down from 12.8 per cent in November 2020, when we were several months into the pandemic.

While 69.1 per cent of Canadians have never subscribed to any meal kit service, 22.5 per cent have ceased to use a meal kit service. Only three per cent are now fully committed to a meal kit provider and expect to continue to use the service. Another 9.8 per cent believe they may use meal kits in the future but remain unsure. Those percentages are very low. Retention of customers has clearly become an issue with these services.

The biggest users of meal kits are Gen Z at 14.5 per cent, followed by Millennials at 12.1 per cent, Gen X at 7.9 per cent and, finally, Baby Boomers at a measly 3.2 per cent. Amongst provinces, the highest usage rate right now is in British Columbia, at 10.4 per cent, followed by Quebec at 9.3 per cent, and Alberta at nine per cent. Ontario is at 8.4 per cent, the national average. The lowest rate in the country is in Manitoba, at 4.5 per cent.

Of Canadians using meal kits today, only 15.8 per cent of them had never ordered meal kits before the pandemic. Given that the market was inundated with rebates and coupons for months to get consumers hooked on some of these services, that percentage is strikingly low. For a while, many meal kit providers were partially subsidizing their own demand, which is why accessing true market loyalty towards these programs was challenging. Also, 66.1 per cent are fully committed to them as they use them either daily or weekly. The main factors for why Canadians order meal kits are for convenience (57.7 per cent), to save time (30.4 per cent), and to avoid planning meals (15.4 per cent).

HelloFresh remains the most popular service at 32 per cent, followed by Good Food at 24.6 per cent. Chef’s Plate, owned by HelloFresh, is third at 14.9 per cent.

Farmers pay a high price for the convenience of consumers by Sylvain Charlebois
The further food moves from the farm, the more the profit is diluted

Estimates from the Agri-Food Analytics Lab suggest that the meal kit market in Canada is likely worth about $1.1 billion today, compared to barely $5 million more than a decade ago. That is quite an accomplishment. At its peak, though, back in 2020, the market surpassed $1.5 billion.

The factors that seem to be pushing consumers away from meal kits are price and the heavy, unsustainable packaging which comes with the delivered meals. The average price is typically between $8 to $13 per meal per person, and you still have to prepare the meal before enjoying it and then clean up afterwards. A total of 78.1 per cent of consumers who have dropped the service felt the prices were too high. As for packaging issues, 67.5 per cent dropped the service due to the overwhelming packaging. And with the cost of food these days, it is highly unlikely prices will drop anytime soon.

Grocers have also gotten better at delivering food to consumers’ homes. Some are offering meal kits themselves in different forms. The retention rate for customers of online grocery sites is also typically much higher. According to Neilson IQ, online grocery shoppers will go back to buying more food online more than 80 per cent of the time. That retention rate is intimidating for meal kit providers. Loyalty is undoubtedly in our grocers’ favour. We could see grocers offering more meal kits or even restaurant chains using our grocers’ distribution network to reach us, physically or virtually.

Some Canadians will remain committed to meal kits. You are likely to waste less food and eat healthier, for the most part. But the industry is facing significant headwinds as the economy trends back to normal after the pandemic. The path to growth is unclear at this point. What’s more worrisome, the cost of food will also be a challenge for meal kit providers struggling to keep costs in check during these turbulent times.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

Sylvain is one of our Thought Leaders. For interview requests, click here.


The opinions expressed by our columnists and contributors are theirs alone and do not inherently or expressly reflect the views of our publication.

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Sylvain Charlebois

Sylvain Charlebois is a Canadian researcher and professor in food distribution and food policy at Dalhousie University in Halifax, Nova Scotia, Canada. He is Dalhousie's past Dean of the Faculty of Management and is a professor and Director of the Agri-Food Analytics Lab.

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